U.S. stocks rallied Thursday, with defensive sectors leading the way, but one pro is watching carefully for a sell signal because he has his eye elsewhere.
"I think we're setting up for a rally outside the United States," Jack Ablin, chief investment officer at BMO Private Bank, said in an interview with "Power Lunch."
"We've had a great move in the United States, but I think now the next leg has to be higher abroad. We'll have to see."
International large cap and emerging markets are "substantially cheaper" than the U.S., with emerging market equities trading at a 50 percent discount to the S&P 500, he said. That's the steepest discount he's seen since 2002, the year that kicked off a decade of emerging markets outperforming the S&P 500 by 230 percent, Ablin noted.
That said, cheap markets can always get cheaper so he's watching for an indication that the markets can gain some traction and move higher.